Last year, I discussed (here) a case in which the United States Equal Employment Opportunity Commission sued an employer for retaliation under Title VII. Now, retaliation is the most common claim employment discrimination claim. But, what made this particular claim unusual was the EEOC’s attack on the employer’s use of
knife-wielding monkeys to coerce settlement fairly common settlement provisions that you guys probably use in your severance agreements (e.g., a general release, a non-disparagement obligation, a confidentiality provision, a covenant not to sue, and a cooperation clause).
Late last year, the Seventh Circuit Court of Appeals weighed in. And it didn’t end well for the EEOC.
Yes, an employee can release discrimination claims.
With a big fat hat tip to Jon Hyman at the Ohio Employer’s Law Blog — or, maybe, just a cool Jay-Z hat-tip — I am pleased to share with you that your general releases are probably still good. Just get rid of the monkey knife-fight provisions, mmkay.
For, as the Seventh Circuit reaffirmed in this decision, “an employee may waive his cause of action under Title VII as part of a voluntary settlement.” And, furthermore, “it is hornbook law that employers can require terminated employees to release claims in exchange for benefits to which they would not otherwise be entitled. Nothing in the employment-discrimination statutes undermines this rule.”
But, there are some limits. Like, you can’t preclude an employee from trying to protect themselves or others by participating in a proceeding before the EEOC (or the state or local equivalent), or otherwise cooperating in any such action. Plus, the court warned that lotsa legalese and other legal mumbo-jumbo may impact enforceability of the agreement. The same goes for situations in which it kinda looks like the company is strong-arming the employee into signing the agreement. (“Here. I don’t care if you don’t understand this agreement. No, don’t take it to a lawyer. In fact, sign this now. Or I’ll unleash Furious George on you.”)
Some tips for you.
Start by following Jon Hyman’s advice:
- Carve out from the release the employee’s right to file a charge of discrimination with the EEOC or the parallel state agency, the right to participate in proceedings with such agencies, and the right to cooperate with such agencies in their investigations.
- Advise the signing employee, in writing, to consult with an attorney before signing.
- Obtain in the agreement the employee’s consent that the employee understood the agreement and is voluntarily signing it.
And two more tips from yours truly:
- If you are settling age discrimination claims, there are a number of rigid settlement terms that must appear in the settlement agreement to have a binding release.
- Have a lawyer draft or review the settlement agreement before presenting it to the employee.